Inflation rebounds to 2% in August

Slower growth

Experts said the latest gloomy indicators add further evidence that previous policy easing and stimulus measures had so far failed to stop the economic slowdown.

China's economy expanded 7.6 percent in the three months through June from a year earlier, the least in three years and the sixth straight quarterly slowdown.

Li added that he would be in favor of the government taking more aggressive measures to ease its monetary policy and stimulate growth.

He also forecast that the central bank may cut both benchmark interest rates and the reserve requirement ratio in next two months.

The central bank has held back from any significant monetary policy loosening since July 5, when it cut interest rates for the second time in less than a month. It also lowered lenders' reserve requirements three times between November and May.

Speaking to business leaders at an Asia-Pacific Economic Cooperation forum in Vladivostok over the weekend, President Hu Jintao reiterated that China will work to balance "steady and robust growth, adjusting economic structure and managing inflation expectations".

He pledged to boost domestic demand and ensure "basic price stability".

He also urged governments in the region to speed up infrastructure development, describing it as key to promoting recovery and achieving sustained and stable growth.

His comments follow a slew of recent announcements by the Chinese government approving the construction of new roads, railways and urban infrastructure that Nomura Holdings Inc estimates will have a combined value of about 1 trillion yuan ($158 billion).

Wang Tao, China economist at UBS AG, said she expected a modest sequential recovery starting from the fourth quarter, driven by policy support and the stabilization of property construction.

 

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